Netflix has reached a resolution in its dispute with SK Telecom and its ISP subsidiary, SK Broadband, over network usage. The two companies announced a new partnership agreement that aims to address the issue and explore future collaboration.
Under the agreement, SK Telecom will begin offering Netflix Basic With Ads service as part of its subscription package, T Universe, starting in the first half of 2024. This move allows SK Telecom subscribers to enjoy Netflix content while also opening up new advertising opportunities for the streaming giant.
In addition to the bundling arrangement, SK Telecom and Netflix will explore the use of SK Telecom’s AI technologies. These technologies include “conversational” UX and personalized recommendation systems, which can enhance the user experience and provide tailored content suggestions.
The resolution comes after a legal dispute that arose earlier in 2021. A South Korean court had ruled that Netflix owed SK Broadband $23 million due to the increased network traffic caused subscribers streaming popular shows like the local drama series D.P. The dispute escalated further when Netflix’s Korean-produced sci-fi series, Squid Game, became a global phenomenon.
To appease SK Telecom, Netflix had initially offered the use of its content delivery network, Open Connect, but the proposal was declined. The details of the final settlement, including whether a paid peering relationship was established, remain undisclosed.
The Asia-Pacific region, where South Korea is located, represents Netflix’s smallest quadrant of operations, generating approximately $954 million in revenue during the second quarter of this year. Though Netflix has close to 40 million subscribers in the APAC region, its paid subscriber base in Korea is reported to be around 1.17 million according to a 2020 report from Korea’s Ministry of Science.
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